FirstGroup shareholders call for US asset sale

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Two major shareholders called for the UK bus and train operator FirstGroup to sell its US assets as part of a portfolio overhaul which already includes the planned sale of North American intercity bus service Greyhound.

Coast Capital Management and property investor Robert Tchenguiz separately asked FirstGroup, which is also assessing options to separate its UK bus division, for more clarity on its plans.

FirstGroup put Greyhound up for sale this year, partly due to competition from low cost airlines and more recently after a drop in demand.

FirstGroup, which last week reported a bigger first-half loss, has said it would focus on its core contracting business in North America, including the First Student school bus service and First Transit transportation service.

Coast Capital, which is FirstGroup’s second largest shareholder with a more than 10% stake, joined Tchenguiz in calling for it to sell the US assets, saying there were no synergies with its UK businesses.

Coast Capital says: “A sale of the US assets would not only release meaningful value for shareholders, but would also allow these businesses and their invaluable employees and managers to thrive under a well-capitalised owner.”

Tchenguiz, who holds a 4.7% economic interest in FirstGroup and is its largest individual shareholder, says he will seek a shareholder meeting and urged its new chairman to review the US operations.

FirstGroup, in response to Tchenguiz, says its First Student and First Transit were “valuable assets and well positioned with profitable growth”. The company says: “The board has been consistent and clear that the objective is to realise value and therefore were a credible and deliverable offer to be received for these or any other business in the portfolio then, of course, the board would give that serious consideration.”

First Student and First Transit accounted for 60% of the company’s operating profit in fiscal 2019.

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